Panel OKs revamp of Fla. public employee pensions

TALLAHASSEE — A proposal to end guaranteed pensions for new teachers, state and county workers and other public employees began moving through the Florida Legislature on Thursday.

A House panel voted to introduce a committee bill that would replace traditional defined benefit pensions with individual investment accounts similar to 401(k) plans for employees hired after Jan. 1, 2014. It would shift investment risk from employers to employees, a growing trend in the private sector. Benefits can vary widely depending upon the performance of investments each employee chooses. The bill also would end disability benefits for new employees.

The measure is a top priority for Gov. Rick Scott and Republican legislative leaders. It cleared the Government Operations Subcommittee on a party-line 9-3 vote.

Republicans and business groups that support the measure contended the switch would save taxpayers money. Democrats, union officials and other critics argued it would have the opposite result.

Opponents also objected to taking a vote before actuarial studies, which are expected to resolve that question, have been completed.

“This is, ram it down everyone’s throat,” said Rep. Irv Slosberg, R-Boca Raton. “We’re not fools. This is just a cost shift, and my advice is find someone else’s pocket to pick. Leave our workers alone.”

Subcommittee Chairman Jason Brodeur, R-Sanford, assured his colleagues there will be plenty more opportunities to discuss and modify the measure when it is heard by other committees.

If passed, the proposal would be the second major change in the Florida Retirement System since Scott took office two years ago. A law passed in 2011 requires public employees to contribute 3 percent of their earnings to the system, in effect a pay cut.

Brodeur stressed that the bill would affect only new hires, not the retirement system’s 623,011 current active members — those now working — or its 334,682 retirees.

Only about 25 percent of all covered employees are state workers. The rest are teachers and local government workers including law enforcement officers and firefighters.

“It doesn’t hurt anybody who’s currently in the system,” Brodeur said. “It doesn’t break any promises to those who haven’t been hired yet and it doesn’t ask for any taxpayer increases either.”

Brodeur acknowledged that the Florida system now is one of the nation’s best-funded and well-managed pension plans.

Financial experts say pension plans that are at least 80 percent funded are considered on solid ground because employees do not all retire at the same time. The Florida system was 87 percent funded as of last June and since then its investments have grown by $10 billion to $132 billion as a result of the ongoing stock market recovery.

In some years the fund has topped 100 percent. That’s enabled the Legislature to divert about $12 billion in state contributions to other purposes over the past dozen years. Also, the 3 percent employee contribution is being used to reduce employer contributions instead of increasing the fund’s assets. Public employers now contribute 3.55 percent for most workers.

“What’s wrong? Why are we trying to fix it?” asked Gary Ramey, president of the Florida Professional Firefighters union. “We’re spending an awful lot of time here and resources for a problem that really doesn’t exist.”

The bill’s supporters, though, say they are worried that kind of success cannot continue, citing huge unfunded liabilities racked by municipalities, other states and private companies.

Brodeur characterized the proposal as a minimal change as opposed to more drastic measures he said would have to be taken if the Florida plan suffers the same fate.

“Closing a defined benefit plan, believe me, is not a minimal change in any way, shape or form,” said Ray Edmondson, CEO of the nonpartisan Florida Public Pension Trustee Association. “It’s the most expensive thing you can do.”

Ramey said state and local governments would have to pay more into the present plan for each current employee as its shrinks due to the lack of new members.

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So the message is it doesn't hurt anyone in the system now, only new hires. That is a great recruitment tool for three of the most important fields: teaching, police, and firefighters. Hey come dedicate your life to making our state a better educated and safer place to live so we can bend you over after 20 years! Then they wonder why it's hard to find quality people!

Let's face it, this system was broke and it had to be fixed. It's going to become relative at some point, when every public entity is operating with the same guidelines. So called "quality people" already know this to be true. You can cluck your tongue in disgust, but it's best to gear up and work the change to your advantage. Just sayin'.

"Financial experts say pension plans that are at least 80 percent funded are considered on solid ground because employees do not all retire at the same time. The Florida system was 87 percent funded as of last June and since then its investments have grown by $10 billion to $132 billion as a result of the ongoing stock market recovery.
In some years the fund has topped 100 percent. That’s enabled the Legislature to divert about $12 billion in state contributions to other purposes over the past dozen years."

It is not broke, it does not need to be fixed. If it was broke, why not allocate the additional 3% that workers are now paying to "beef up" the fund instead of simply reducing the amount of employer contribution? If it is broke, why did it do so well that the Legislature "diverted"( i.e. STOLE ) $12billion for other purposes over the past decade? Oh, but its the employees fault right? Leave it to the employees to fix the gaps created by the legislature. Why don't they add in the 12bill they stole from their workers and run the numbers again... Unreal!!!Bunch of crooks!!!

The system in indeed broken because "that money" was allowed to be used in other areas while our leaders pretended not to see what the legislature was doing. "That money" no longer exists. The well is dry and it simply can't rejuvenate itself. That's what I would call broken. Many states are experiencing this problem. NJ is just one that comes to mind. No one said it is the employee's fault but the gap is so wide that they couldn't begin to correct it, even if they were inclined to do so. The world is changing......and best to go with it, rather than stand on some principal that no longer exists.

You restated your opinion but you failed to state any facts as to how it is broken. The article says that FL is one of the nations best funded and well managed plans. Politicians have stated that they are worried that it is not sustainable, but have given no real evidence to back it up. I know nothing about NJ, but if it is broke then it needs to be fixed. But in FL, if it ain't broke don't fix it....